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Dave Nadig
2:12
The buyers for 100 year bonds would likely not be you and me as individuals, but other central banks, pension funds, and large instutitions that have effectively perpetual liabilities they need to fund.
As a general principle, folks buy bonds with maturities that match their liability profile (thats a huge oversimplification, but a useful one).
2:13
So you wouldn't buy a 10 year bond as your "safe haven" to stash your kids college money in, if you need to start paying next year.
Because between now and then, you could have rates move, your principle erode, and you'd be left short.
but if you bought a 1 year bond for that slide, well, you know your bond just matures when you need the money.
2:14
So 50s or 100s would be targeted at institutions with that kind of time horizon.
Great question though!
Nate Geraci
2:14
Dave Nadig
2:14
Hi Nate!  So, in theory, every big mutual fund company should just license the vanguard shareclass patent.  However, I think there are a few issues.
First, the patent expires soon, so it would be a bunch of work for a short term solution.
2:15
Second, it's not clear to me you could share-class a non-transparent active fund.  I haven't thought through the specific ramifications, but the vanguard structure has quite specific language (that's unique) around how creation/redemption and accounting are done, and I think the non-transparent active structure would probably blow it up.
2:16
And as for how much: I'm not privvy to the specifics, but I think it's telling that in the past 15 years or so, literally nobody has licensed the share-class patent from vanguard.
the implication has to be one of three things:
1: Vanguard won't.
2: Vanguard has priced it to effectively be 1.
3: Other fund companies REALLY don't want to be beholden to a competitor.
2:17
OK, a few more quick ones and we'll wrap for this CRAZY Friday.
Aidan Heinz
2:17
Are any investing themes necessarily specific to certain seasons?
Dave Nadig
2:18
Seasonality is one of the things every economics grad student latches on to for Thesis ideas.  After all, if you take any data series that's date-aligned, its VERY easy to run it against the date series and mine for patterns.
Most of the big "rules of thumb" like "sell in may and go away" or "never buy stocks in September" or whatnot tend to fall by the wayside when exposed to hard scrutiny.  And if you think about it, even if they ONCE worked, its SO easy to do, any real edge would be arbed out instantly.
2:19
That's not to say there are no seasons in business of course: retail sales are always higher in NOv/Dec then they are in March, for example.  And natural gas has very clear demand cycles.
THe challenge as an investor is trying to "play" those cycles, because, as I said, absolutely EVERYONE knows these seasonal patterns exist.
2:20
So while you might try and game, say, retail, by buying in September and Selling in March, everyone else doing the same thing just means September prices get overvalued, so now you have to move to august, etc. etc...
So I'm unaware of anyone making millions off raw, obvious seasonal trading strategies in the modern markets.
Erik Pingoud
2:20
What is the best ETF class for an impending recession
Dave Nadig
2:22
Well, this is going to sound flippant but: if you were 100% positive we were entering a recession TODAY, and it was going to last 24 months, you'd get out of as much "risk on" exposure as you could and buy real assets (maybe discount real estate, gold, farmland on the cheap, etc) and leave a huge slug of cash available for magically calling the bottom sometime in the future.
The problem is that you can be right in principle but wrong in timing for a LONG TIME.
2:23
Any time we have a major pullback or recession, you can find a litany of people who "called it."  Many of them called it for a decade before it happened, so they would have missed an entire bull market waiting ot be right.
Which, again, is why trying to market time this stuff is generally going to end in tears.
A better approach is to say "do I think my portfolio will do better/worse than the market as a whole in a recession, or in 2 more years of expansion"
2:24
If you feel comfortable in either case? you're good to go.  And thats much more about you and your risk tolerance than any crystal ball accuracy.
OK, last question:
Dobbie
2:24
I've been watching your ETF education videos.  If you had to pick one thing that's MOST important to focus on when picking an ETF, what is it?  Expenses? Trading? Structure?
Dave Nadig
2:24
Thanks for watching!  I'm posting another one hopefully this weekend.
2:25
And that's actually the answer to your question.  The number one most important thing in considering any investment is exposure -- what's actually in the fund.
The cheapest large cap equity fund, that trades like water, is a terrible substitute for a bond fund, if a bond fund is what you want.
So FIRST think about your exposure, and then if you've narrowed it down to a handful of funds that are similar, then consider all the rest.
2:26
Here's a followup from the previous question on recession-proofing:
Erik Pingoud
2:26
I totally understand. However I’m  a retiree with a lot of assets in the bank and for me it becomes an issue of not losing money not an issue of making money
Dave Nadig
2:27
Totally fair, and if you're in the position of just wanting a pool of assets to last a long time, then you need to acknowledge your risk tolerance is very low.  A low risk portfolio is nearly by definition better in a recession than a high risk one.
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